Rule 105

Rule 105 of Regulation M, 17 C.F.R. § 242.105, makes it unlawful to sell a stock short in a defined restricted period before a registered offering of that stock is priced and then buy the stock in the offering, unless an exception applies. It applies whatever the trader intended.

manipulation techniques · updated 2026-09-20

Where does rule 105 come up?

This term is used in the following manipulation techniques, each explained in full on its own page.

• Rule 105 offering shorts — Rule 105 offering shorts are short sales of a stock in the restricted period before a follow-on offering is priced, followed by a purchase of that stock in the offering, which Regulation M Rule 105 prohibits whatever the trader intended.

Enforcement actions involving these techniques

See also

• Regulation M — Regulation M restricts bidding for or purchasing a security by those participating in its distribution, during a defined restricte…
• Rule 105 restricted period — The Rule 105 restricted period is the shorter of two windows ending at the pricing of an offering: the five business days before p…
• Prophylactic rule — A prophylactic rule prohibits conduct that could lead to harm without requiring proof of harm or of intent. The SEC describes Rule…

Terms that refer here

Bona fide purchase exception · Firm commitment offering · Follow-on offering · Prophylactic rule · Rule 105 restricted period

Back to the full glossary — 261 defined terms.